What does the doctrine of "piercing the corporate veil" allow?

The doctrine of "piercing the corporate veil" allows courts to hold shareholders personally liable for the debts and obligations of a corporation, typically when certain conditions are met. This may occur in situations where the corporation has been used to perpetrate fraud, circumvent the law, or when it is simply an alter ego of the shareholders, failing to maintain the necessary separation between the corporation and its owners.

The principle is rooted in the idea that if shareholders misuse the corporate structure to avoid personal responsibility, the law should not permit them to escape liability by hiding behind the corporate entity. It reinforces the concept that while corporations provide limited liability, this protection is not absolute and can be disregarded under specific circumstances to uphold justice and prevent abuse.

The other options presented do not accurately describe the doctrine. For instance, the idea that corporations can avoid liabilities tends to contradict the very essence of corporate veiling situations, where accountability is sought. Similarly, shareholders suing corporations for damages or companies protecting confidential information do not directly relate to the principles underlying piercing the corporate veil. The focus of this legal doctrine is on accountability and ensuring fair treatment, particularly in cases of misuse of the corporate structure.